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ECB curbs to be eased further

— PHOTO: SHANKER CHAKRAVARTY

BLAMES HIGH OIL PRICES: Union Finance Minister P. Chidambaram (left) with President-elect, Assocham, Sajjan Jindal, at an interactive session in New Delhi on Friday.

NEW DELHI: Even after relaxing restrictions on Indian firms to raise overseas funds, the Government on Friday hinted at further easing of norms governing external commercial borrowings (ECBs).

“The Government and the RBI are working together and will find a way to ease ECB restrictions,” Finance Minister P. Chidambaram said while addressing an interactive session organised by the Associated Chambers of Commerce and Industry of India (Assocham) here on Friday.

The Government, he said, had in August 2007 imposed restrictions on firms to raise funds through ECBs and these restrictions have mostly been lifted already.

“And I said then and I say now because the time has come. We have lifted some restrictions on Thursday. Some of the restrictions remain,” he said, adding that these could be lifted soon.

Mr. Chidambaram asserted that the decision to relax the ECB norms would have a “positive effect on financing requirement of the infrastructure and SME sectors.”

About its impact on capital inflows and inflation, the Finance Minister said, “I am sure the governor has taken all this into account. It is a calibrated opening.”

He blamed high oil prices for rise in inflation, which has crossed the 8-per cent mark, and asked industry to help hold the price line to contain inflation and not to exploit the short-term mismatch in demand and supply.

“Industry can try to hold the price line to the extent possible. With inputs cost rising, yes, there is a compulsion to raise output prices. But even so I think, there is a considerable room for industry to try and hold the price line,” he said.

The Government had tried to impress upon industry that to ensure “inclusive growth” all Indians had to come together, as the international crude oil prices, which have crossed $130 a barrel, were leading to rise in prices of all commodities, especially the food prices.

“While new capacities are added, while productivity gains are being reaped, there is a tendency in some sections of Indian industry to exploit short term supply-demand mismatches for short term price opportunities,” he lamented and reminded that the true leadership demanded resisting these temptations.

Specifically pointing to Jindal Steel chief Sajjan Jindal, who will take over as new President of Assocham, he said industry should come forward to hold the price line.

“Industry should recognise that to ensure inclusive growth, it should work together to weather the storm and hold the price line,” the Finance Minister said.

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